LIFETIME BRANDS, INC

Previous wording

•Legislative and regulatory risk, including those relating to the recent enactment of the OBBBA;

Current wording

•Legislative and regulatory risk, including those relating to the recent enactment of the OBBBA and the impact of a continued shutdown of the U.S. government;

Previous wording

The Company is required to file its Annual Reports on Forms 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Form 8-K, and other reports and documents as required from time to time with the SEC. The Company also maintains a website athttp://www.lifetimebrands.com. Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q. The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after these reports are filed with or furnished to the SEC. Users can access these reports free of charge on the

Current wording

The Company is required to file its Annual Reports on Forms 10-K, Quarterly Reports on Forms 10-Q, Current Reports on Form 8-K, and other reports and documents as required from time to time with the SEC. The Company also maintains a website athttp://www.lifetimebrands.com. Information contained on this website is not a part of or incorporated by reference into this Quarterly Report on Form 10-Q. The Company makes available on its website the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these reports as soon as reasonably

Previous wording

Company’s website. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company’s electronic filings with the SEC athttp://www.sec.gov.

Current wording

30 - practicable after these reports are filed with or furnished to the SEC. Users can access these reports free of charge on the Company’s website. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding the Company’s electronic filings with the SEC athttp://www.sec.gov.

Previous wording

On April 9, 2025, the U.S. imposed an aggregate 145% tariff on imports from China, which was subsequently reduced to 30% effective May 14, 2025 for a 90 day pause period. Other recent tariff policy updates that went into effect in April 2025 include a 10% universal tariff for all countries and reciprocal tariffs for specific countries, which were originally paused until July 9, 2025 and subsequently extended to August 1, 2025. As the Company sources almost all of its products from suppliers located outside the United States, primarily in China, any new or increased tariffs, quotas, embargoes, or other trade barriers could impact our supply chain and cost structure. Additionally, retaliatory measures by affected countries, could further disrupt operations or reduce our competitiveness in international markets. The Company continues to monitor these changing tariffs and trade restrictions. To mitigate the impact of the increase price of goods imported by the Company into the U.S., the Company has negotiated price increase prices with its customers, negotiated product costs with its suppliers and continues to pursue diversification of its imports to countries that are expected to be subject to lower tariffs. To the extent that tariffs return to higher rates and the Company cannot mitigate the impact of the increase on the price of goods imported by the Company into the U.S., it may result in lower gross margin that the Company realizes from the sale of its products. The broader macroeconomic impacts related to the changes in tariff policies including potential mitigation efforts by retailers may negatively impact consumer spending and buying patterns of the Company's products. This could materially adversely affect the Company’s results of operations and financial condition.

Current wording

The Company sources almost all of its product from third-party manufacturers outside the U.S., primarily in China. This geographic concentration in suppliers exposes the Company to risks associated with doing business globally, including risks relating to changes in U.S. tariff and trade policies. New or increased tariffs, quotas, embargoes, or other trade barriers could adversely impact our supply chain and cost structure. To mitigate the impact of these tariffs, the Company has negotiated price increases to its U.S. customers, negotiated lower product costs with its foreign suppliers and pursues diversification of its foreign sourced products to countries that are expected to be subject to lower tariffs. The Company's tariff mitigation strategy is intended to maintain the Company's gross margin dollars and therefore, may result in a decline in gross margin percentage. If tariffs rates were to increase further and the Company is unable to mitigate the impact of the increase cost, it would result in lower gross margin from the sale of its products. The broader macroeconomic impacts related to the changes in tariff policies including potential mitigation efforts by retailers may negatively impact consumer spending and buying patterns of the Company's products. This could materially adversely affect the Company’s results of operations and financial condition.

Previous wording

In January 2025, the Company announced the relocation of the Company’s east coast distribution facility currently located in Robbinsville, NJ (the “Robbinsville Facility”) to a warehouse and distribution space in Hagerstown, Maryland (the “Hagerstown Facility”). In connection with the relocation, the Company will exit the Robbinsville Facility. The Company expects to incur one-time exit costs up to $7.0 million for employee severance, certain employee relocation costs, and remaining lease costs for the Robbinsville Facility, which costs are expected to be incurred in 2025 and 2026.

Current wording

In January 2025, the Company announced the relocation of the Company’s east coast distribution operations currently located in Robbinsville, NJ (the “Robbinsville Facility”) to Hagerstown, Maryland (the “Hagerstown Facility”). In connection with the relocation, the Company expects to incur exit costs of approximately $7.0 million for employee severance, certain employee relocation costs, and remaining lease costs for the Robbinsville Facility, which costs are expected to be incurred in 2025 and 2026.

Previous wording

30 - inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational. These one-time costs are expected to be incurred in 2026. The Company expects that the Hagerstown Facility will be operational by the second quarter of 2026. Additionally, in connection with the relocation to the Hagerstown Facility, the Company will receive tax abatement and incentives over the term of the Lease from the State of Maryland and Washington County, Maryland totaling approximately $13.1 million. These incentives include real property tax abatement, employee state withholding tax credit, conditional grants and income tax credits.

Current wording

The Hagerstown Facility will require capital expenditures for equipment and certain leasehold improvements of approximately $9.0 million. Start-up costs are estimated to be approximately $7.0 million, which includes recruitment, relocation of inventory, set up costs and lease expenses prior to the Hagerstown Facility being fully operational. These one-time costs are expected to be incurred in 2026. The Company expects that the Hagerstown Facility will be operational in the second quarter of 2026. Additionally, in connection with the relocation to the Hagerstown Facility, the Company will receive tax abatement and incentives over the term of the lease from the State of Maryland and Washington County, Maryland totaling approximately $13.1 million. These incentives include real property tax abatement, employee state withholding tax credit, conditional grants and income tax credits.

Previous wording

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment. The Company expects this plan to improve future results in its International segment through sales growth and the identification costs efficiencies. On July 8, 2025, the Company announced a reorganization of its international workforce in connection with Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of the International segment. The reorganization primarily affects the structure of the International segment's merchandising and sales workforce. The estimated restructuring expenses related to severance associated with the reorganization is $0.3 million. This charge will be recognized in the third quarter of 2025.

Current wording

In January 2025, the Company launched Project Concord, management's comprehensive plan to propel growth and streamline the cost structure of its International operations. The Company expects this plan to improve future results of its International segment through sales growth and the identified costs efficiencies. On July 8, 2025, the Company announced a reorganization of its international workforce in connection with Project Concord. The reorganization primarily affected the structure of the International segment's merchandising and sales workforce. The restructuring expenses related to severance associated with the reorganization of $0.3 million was recorded in the third quarter of 2025.

Previous wording

Consolidated net sales for the three months ended June 30, 2025 were $131.9 million, representing a decrease of $9.8 million, or 6.9%, as compared to net sales of $141.7 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $10.4 million, or 7.3%, as compared to consolidated net sales in the corresponding period in 2024.

Current wording

Consolidated net sales for the three months ended September 30, 2025 were $171.9 million, representing a decrease of $11.9 million, or 6.5%, as compared to net sales of $183.8 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $12.5 million, or 6.8%, as compared to consolidated net sales in the corresponding period in 2024.

Previous wording

Net sales for the U.S. segment’s Kitchenware product category were $82.5 million for the three months ended June 30, 2025, an increase of $1.7 million, or 2.1%, as compared to $80.8 million for the corresponding period in 2024. The increase was driven by higher sales for cutlery and boards and kitchen measurement products. These increases were offset by a reduction in sales for kitchen tools and bakeware.

Current wording

Net sales for the U.S. segment’s Kitchenware product category were $98.6 million for the three months ended September 30, 2025, an increase of $1.3 million, or 1.3%, as compared to $97.3 million for the corresponding period in 2024. The increase was driven by higher sales for cutlery and boards and kitchen measurement products. These increases were offset by a reduction in sales for bakeware and barware products.

Previous wording

Net sales for the U.S. segment’s Tableware product category were $21.3 million for the three months ended June 30, 2025, a decrease of $5.0 million, or 19.0%, as compared to $26.3 million for the corresponding period in 2024. The decrease was attributable to lower warehouse club programs for dinnerware and flatware.

Current wording

Net sales for the U.S. segment’s Tableware product category were $31.6 million for the three months ended September 30, 2025, a decrease of $9.3 million, or 22.7%, as compared to $40.9 million for the corresponding period in 2024. The decrease was attributable to lower warehouse club programs for dinnerware and flatware.

Previous wording

Net sales for the U.S. segment’s Home Solutions product category were $15.5 million for the three months ended June 30, 2025, a decrease of $7.9 million, or 33.8%, as compared to $23.4 million for the corresponding period in 2024. The decrease was attributable to lower sales for hydration products, bath measurement products and home décor products.

Current wording

Net sales for the U.S. segment’s Home Solutions product category were $27.9 million for the three months ended September 30, 2025, a decrease of $4.1 million, or 12.8%, as compared to $32.0 million for the corresponding period in 2024. The decrease was attributable to lower sales for home décor and bath measurement products, which was partially offset by higher sales in the back-to-school lunch box category.

Previous wording

Gross margin for the U.S. segment was $46.7 million, or 39.1%, for the three months ended June 30, 2025, as compared to $50.5 million, or 38.7%, for the corresponding period in 2024. The improvement in the gross margin percentage was driven by customer mix.

Current wording

Gross margin for the U.S. segment was $55.5 million, or 35.1%, for the three months ended September 30, 2025, as compared to $62.7 million, or 36.8%, for the corresponding period in 2024. The decrease in the gross margin percentage was attributable to higher selling prices, offset by higher tariffs. The decrease in gross margin dollars was driven by lower sales volume.

Previous wording

Distribution expenses for the three months ended June 30, 2025 were $17.3 million, as compared to $15.1 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 13.1% for the three months ended June 30, 2025, as compared to 10.6% for the three months ended June 30, 2024.

Current wording

Distribution expenses for the three months ended September 30, 2025 were $17.9 million, as compared to $20.0 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 10.4% for the three months ended September 30, 2025, as compared to 10.9% for the three months ended September 30, 2024.

Previous wording

Distribution expenses as a percentage of net sales for the U.S. segment were 11.4% and 9.5% for the six months ended June 30, 2025 and 2024, respectively. Distribution expenses during the six months ended June 30, 2025 and 2024 included $0.1 million for redesign costs related to the Company's warehouses. As a percentage of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 11.5% and 10.0% for the six months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of net sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, an increase in employee expenses as a result of less labor management efficiencies due to higher inventory levels, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Current wording

34 - of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 8.5% and 10.1% for the three months ended September 30, 2025 and 2024, respectively. The decrease in expenses as a percentage of sales was attributable to lower depreciation expense due to changes in asset retirement obligation estimates in the prior year, improved labor management efficiencies resulting in a decrease of employee expenses and higher sales volume due to sales mix resulting in a favorable impact of fixed expenses. The decrease was partially offset by higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024.

Previous wording

Distribution expenses as a percentage of net sales for the International segment were 29.8% for the three months ended June 30, 2025, compared to 28.5% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 26.8% and 25.1% for the three months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region.

Current wording

Distribution expenses as a percentage of net sales for the International segment were 27.1% for the three months ended September 30, 2025, compared to 25.4% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses distribution expenses were 22.6% and 24.2% for the three months ended September 30, 2025 and 2024, respectively. The decrease in expenses as a percentage of sales was due to lower freight-out expenses and higher shipment volume due to sales mix resulting in favorable impact of fixed expenses, partially offset by an increase in expense due to expanded distribution of the Company's products within the Asia Pacific region.

Previous wording

Selling, general and administrative expenses for the U.S. segment were $59.5 million for the six months ended June 30, 2025, as compared to $60.3 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 24.0% and 23.1% for the six months ended June 30, 2025 and 2024, respectively. The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume, an increase in provision for doubtful accounts in the current period, and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024. This was partially offset by lower employee expenses, including incentive compensation.

Current wording

Selling, general and administrative expenses for the U.S. segment were $28.4 million for the three months ended September 30, 2025, as compared to $29.9 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 18.0% and 17.6% for the three months ended September 30, 2025 and 2024, respectively. The decrease in selling, general and administrative expenses was attributable to lower employee expenses, including incentive compensation, partially offset by an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024. The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume.

Previous wording

Unallocated corporate expense for the three months ended June 30, 2025 was $4.3 million, as compared to $5.1 million for the corresponding period in 2024. The decrease compared to the prior period was due to lower incentive compensation and legal expenses.

Current wording

Unallocated corporate expense for the three months ended September 30, 2025 was $3.7 million, as compared to $4.3 million for the corresponding period in 2024. The decrease compared to the prior period was due to lower incentive compensation and legal expenses.

Previous wording

Interest expense was $5.1 million and $5.2 million for the three months ended June 30, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Current wording

Interest expense was $5.0 million and $5.8 million for the three months ended September 30, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Previous wording

Mark to market loss on interest rate derivatives was $0.2 million for the three months ended June 30, 2025, as compared to $0.1 million for the three months ended June 30, 2024. The loss recognized for the three months ended June 30, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment. The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments. These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt. As of June 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Current wording

Mark to market loss on interest rate derivatives was $0.01 million for the three months ended September 30, 2025, as compared to $0.9 million for the three months ended September 30, 2024. The loss recognized for the three months ended September 30, 2025 and 2024, respectively, was attributable to the change in the fair value due to the change in the projected interest rate environment. The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments. These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt. As of September 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Previous wording

Income tax benefit of $2.8 million and benefit of $0.1 million for the three months ended June 30, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 6.5% and benefit rate of 0.3%, respectively. The effective tax rate for the three months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter. The effective tax rate for the three months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the expiration of non-qualified stock options and the vesting of equity-based awards, where the book expense exceeded the tax deduction upon vesting, and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Current wording

Income tax provision of $2.9 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax provision rate of 171.1% and 81.4%, respectively. The effective tax rate for the three months ended September 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to the impact of non-deductible expenses, foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance and a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the second quarter. The effective tax rate for the three months ended September 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Previous wording

Consolidated net sales for the six months ended June 30, 2025 were $271.9 million, a decrease of $12.0 million, or 4.2%, as compared to net sales of $283.9 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $12.4 million, or 4.4%, as compared to consolidated net sales in the corresponding period in 2024.

Current wording

Consolidated net sales for the nine months ended September 30, 2025 were $443.9 million, a decrease of $23.8 million, or 5.1%, as compared to net sales of $467.7 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations and was determined by applying 2025 average rates to 2024 local currency amounts, consolidated net sales decreased by $24.9 million, or 5.3%, as compared to consolidated net sales in the corresponding period in 2024.

Previous wording

Net sales for the U.S. segment’s Kitchenware product category were $162.0 million for the six months ended June 30, 2025, a decrease of $2.3 million, or 1.4%, as compared to $164.3 million for the corresponding period in 2024. The decrease was driven by lower sales for kitchen tools, partially offset by higher sales for cutlery and boards and kitchen measurement products.

Current wording

Net sales for the U.S. segment’s Kitchenware product category were $260.7 million for the nine months ended September 30, 2025, a decrease of $1.0 million, or 0.4%, as compared to $261.7 million for the corresponding period in 2024. The decrease was driven by lower sales for kitchen tools, bakeware and barware, partially offset by higher sales for cutlery and boards and kitchen measurement products.

Previous wording

Net sales for the U.S. segment’s Tableware product category were $48.9 million for the six months ended June 30, 2025, a decrease of $3.2 million, or 6.1%, as compared to $52.1 million for the corresponding period in 2024. The decrease was driven by lower flatware sales due to a warehouse club program not repeated, partially offset by higher sales in dinnerware in the dollar channel.

Current wording

Net sales for the U.S. segment’s Tableware product category were $80.5 million for the nine months ended September 30, 2025, a decrease of $12.5 million, or 13.4%, as compared to $93.0 million for the corresponding period in 2024. The decrease was driven by lower flatware sales due to a warehouse club program not repeated, partially offset by higher sales in dinnerware in the dollar channel.

Previous wording

Net sales for the U.S. segment’s Home Solutions product category were $36.9 million for the six months ended June 30, 2025, a decrease of $7.7 million, or 17.3%, as compared to $44.6 million for the corresponding period in 2024. The decrease was attributable to lower sales of hydration products and bath measurement products. The decrease was partially offset by higher sales for home décor products driven by a new warehouse club program and sales in the dollar channel.

Current wording

Net sales for the U.S. segment’s Home Solutions product category were $64.8 million for the nine months ended September 30, 2025, a decrease of $11.7 million, or 15.3%, as compared to $76.5 million for the corresponding period in 2024. The decrease was attributable to lower sales of hydration products and bath measurement products. The decrease was partially offset by higher sales in the back-to-school lunch box category.

Previous wording

Net sales for the International segment were $12.6 million for the three months ended June 30, 2025, an increase of $1.4 million, or 12.5%, as compared to net sales of $11.2 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.8 million, or 6.6%, as compared to consolidated net sales in the corresponding period in 2024. The increase was driven by improved sales in the U.K. and continental Europe.

Current wording

Net sales for the International segment were $37.9 million for the nine months ended September 30, 2025, an increase of $1.4 million, or 3.8%, as compared to net sales of $36.5 million for the corresponding period in 2024. In constant currency, a non-GAAP financial measure, which excludes the impact of foreign exchange fluctuations, net sales increased by $0.3 million, or 0.9%, as compared to consolidated net sales in the corresponding period in 2024. The increase was attributable to higher sales in the Asia Pacific region, partially offset by lower sales in the U.K.

Previous wording

Gross margin for the International segment was $8.1 million, or 33.6%, for the six months ended June 30, 2025, as compared to $8.3 million, or 36.2%, for the corresponding period in 2024. The decrease in gross margin percentage was driven by customer and product mix.

Current wording

Gross margin for the International segment was $13.0 million, or 34.3%, for the nine months ended September 30, 2025, as compared to $13.0 million, or 35.6%, for the corresponding period in 2024. The decrease in gross margin percentage was driven by customer and product mix.

Previous wording

Distribution expenses for the six months ended June 30, 2025 were $35.4 million, as compared to $31.2 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 13.0% for the six months ended June 30, 2025, as compared to 11.0% for the six months ended June 30, 2024.

Current wording

Distribution expenses for the nine months ended September 30, 2025 were $53.3 million, as compared to $51.3 million for the corresponding period in 2024. Distribution expenses as a percentage of net sales were 12.0% for the nine months ended September 30, 2025, as compared to 11.0% for the nine months ended September 30, 2024.

Previous wording

Distribution expenses as a percentage of net sales for the U.S. segment were 11.4% and 9.1% for the three months ended June 30, 2025 and 2024, respectively. Distribution expense during the three months ended June 30, 2025 included $0.1 million for redesign costs related to the Company's warehouses. As a percentage of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 11.0% and 9.5% for the three months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was attributable to lower shipment volume resulting in an unfavorable impact of fixed expenses, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024 and an increase in freight-out expenses.

Current wording

Distribution expenses as a percentage of net sales for the U.S. segment were 10.5% and 9.6% for the nine months ended September 30, 2025 and 2024, respectively. Distribution expenses during the nine months ended September 30, 2025 and 2024 included $0.2 million and $0.7 million, respectively, for redesign costs related to the Company's warehouses. As a percentage of sales shipped from the Company’s U.S. warehouses, excluding non-recurring expenses, distribution expenses were 10.3% and 10.0% for the nine months ended September 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was attributable to an increase in freight-out expenses, higher software expenses due to the launch of a new warehouse management system at the Company's west coast distribution center in September 2024, partially offset by lower depreciation expense due to changes in asset retirement obligation estimates in the prior year.

Previous wording

Distribution expenses as a percentage of net sales for the International segment were 29.1% for the six months ended June 30, 2025, compared to 27.7% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 25.9% and 24.3% for the six months ended June 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region and an increase in freight-out expenses.

Current wording

Distribution expenses as a percentage of net sales for the International segment were 28.4% for the nine months ended September 30, 2025, compared to 26.9% for the corresponding period in 2024. As a percentage of sales shipped from the Company’s international warehouses, distribution expenses were 24.6% and 24.3% for the nine months ended September 30, 2025 and 2024, respectively. The increase in expenses as a percentage of sales was primarily attributed to higher warehouse expenses related to the expanded distribution of the Company's products within the Asia Pacific region, partially offset by a decrease in freight-out expenses.

Previous wording

Selling, general and administrative expenses for the U.S. segment were $29.5 million for the three months ended June 30, 2025, as compared to $29.4 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 24.7% and 22.5% for the three months ended June 30, 2025 and 2024, respectively. The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume, an increase in the provision for doubtful accounts in the current period and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024. This was partially offset by lower employee expenses, including incentive compensation.

Current wording

Selling, general and administrative expenses for the U.S. segment were $87.9 million for the nine months ended September 30, 2025, as compared to $90.2 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 21.7% and 20.9% for the nine months ended September 30, 2025 and 2024, respectively. The decrease in selling, general and administrative expenses was attributable to lower employee expenses, including incentive compensation, partially offset by an increase in provision for doubtful accounts in the current period, and an increase in amortization expense related to an indefinite-lived trade name, which was reclassified to a finite-lived trade name in the fourth quarter 2024. The increase in selling, general and administrative expenses as a percentage of net sales, was attributable to the impact of fixed costs on lower sales volume.

Previous wording

Selling, general and administrative expenses for the International segment were $7.4 million for the six months ended June 30, 2025, as compared to $8.0 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 30.7% and 34.9% for the six months ended June 30, 2025 and 2024, respectively. The decrease was primarily attributable to foreign currency exchange gains, and lower advertising expenses.

Current wording

Selling, general and administrative expenses for the International segment were $10.8 million for the nine months ended September 30, 2025, as compared to $12.5 million for the corresponding period in 2024. As a percentage of net sales, selling, general and administrative expenses were 28.5% and 34.2% for the nine months ended September 30, 2025 and 2024, respectively. The decrease was primarily attributable to foreign currency exchange gains, lower advertising expenses and commissions, and the prior year expense included penalties related to tax filings.

Previous wording

Unallocated corporate expenses for the six months ended June 30, 2025 were $2.1 million, as compared to expenses of $9.6 million for the corresponding period in 2024. The decrease in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the current period, lower incentive compensation and legal expenses, partially offset by an increase in stock compensation expense.

Current wording

Unallocated corporate expenses for the nine months ended September 30, 2025 were $5.8 million, as compared to expenses of $13.9 million for the corresponding period in 2024. The decrease in expenses was driven by the recognition of a net legal settlement gain of $6.4 million in the current period, lower incentive compensation, legal expenses and professional fees, partially offset by an increase in stock compensation expense.

Previous wording

During the second quarter of 2025, the Company’s qualitative assessment of goodwill indicated triggering events had occurred in its U.S. reporting unit. The Company performedan interim impairment test of the goodwill in the U.S. reporting unit, that resulted in a $33.2 million non-cash goodwill impairment charge.

Current wording

During the second quarter of 2025, the Company’s qualitative assessment of goodwill indicated triggering events had occurred in its U.S. reporting unit. The Company performedan interim impairment test of the goodwill in the U.S. reporting unit as of June 30, 2025, that resulted in a $33.2 million non-cash goodwill impairment charge.

Previous wording

Interest expense was $10.0 million and $10.8 million for the six months ended June 30, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Current wording

Interest expense was $15.0 million and $16.6 million for the nine months ended September 30, 2025 and 2024, respectively. The decrease in expense was a result of lower average outstanding borrowings in the current period, and lower interest rates on outstanding borrowings.

Previous wording

Mark to market loss on interest rate derivatives was $0.7 million for the six months ended June 30, 2025, as compared to $0.3 million for the six months ended June 30, 2024. The increase was attributable to the change in the fair value based on the increase in interest rates. The mark to market amount represents the change in fair value on the Company’s interest rate

Current wording

Mark to market loss on interest rate derivatives was $0.8 million for the nine months ended September 30, 2025, as compared to $1.2 million for the nine months ended September 30, 2024. The decrease was attributable to the change in the fair value based on the increase in interest rates. The mark to market amount represents the change in fair value on the Company’s interest rate derivatives that have not been designated as hedging instruments. These derivatives were entered into for purposes of locking-in a fixed interest rate on a portion of the Company’s variable interest rate debt. As of September 30, 2025, the intent of the Company is to hold these derivative contracts until their maturity.

Previous wording

Loss on equity securities was $14.2 million for the three months ended June 30, 2024. In the second quarter of 2024, the Company lost significant influence over its investment in Vasconia and discontinued the equity method of accounting. This change resulted in the reclassification of previously recognized accumulated other comprehensive losses to the investment balance and subsequently resulted in a non-cash loss of $14.2 million, to reduce the investment to its fair value. NOTE 4 —INVESTMENT for additional information.

Current wording

Loss on equity securities was $14.2 million for the nine months ended September 30, 2024. In the second quarter of 2024, the Company lost significant influence over its investment in Vasconia and discontinued the equity method of accounting. This change resulted in the reclassification of previously recognized accumulated other comprehensive losses to the investment balance and subsequently resulted in a non-cash loss of $14.2 million, to reduce the investment to its fair value. NOTE 4 —INVESTMENT for additional information.

Previous wording

Income tax benefit of $2.9 million and income tax provision of $0.2 million for the six months ended June 30, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 6.2% and income tax provision rate of (0.7)%, respectively. The negative rate for the six months ended June 30, 2024 reflects tax expense on a pretax financial reporting loss. The effective tax rate for the six months ended June 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the current quarter. The effective tax rate for the six months ended June 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Current wording

Income tax benefit of $(0.1) million and income tax provision of $1.7 million for the nine months ended September 30, 2025 and 2024, respectively, represent taxes on both U.S. and foreign earnings at a combined effective income tax benefit rate of 0.14% and provision rate of (8.2)%, respectively. The effective tax rate for the nine months ended September 30, 2025 differs from the federal statutory income tax rate of 21.0% primarily due to a partial valuation allowance on U.S. deferred tax assets that are not more likely than not to be realized as a result of the goodwill impairment in the second quarter. The negative rate for the nine months ended September 30, 2024 reflects tax expense on a pretax financial reporting loss. The effective tax rate for the nine months ended September 30, 2024 differs from the federal statutory income tax rate of 21.0% primarily due to the impact of non-deductible expenses and foreign losses for which no tax benefit is recognized as such amounts are fully offset with a valuation allowance.

Previous wording

Equity in losses of Vasconia, net of taxes, was $2.1 million for the six months ended June 30, 2024.

Current wording

Equity in losses of Vasconia, net of taxes, was $2.1 million for the nine months ended September 30, 2024.

Previous wording

At June 30, 2025, the Company had cash and cash equivalents of $12.0 million, compared to$2.9 million at December 31, 2024. Working capital was $210.1 million at June 30, 2025, compared to $221.8 million at December 31, 2024. Liquidity as of June 30, 2025 was $96.9 million, consisting of $12.0 million of cash and cash equivalents, $65.7 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $19.2 million of available funding under the Receivables Purchase Agreement.

Current wording

At September 30, 2025, the Company had cash and cash equivalents of $12.1 million, compared to$2.9 million at December 31, 2024. Working capital was $236.4 million at September 30, 2025, compared to $221.8 million at December 31, 2024. Liquidity as of September 30, 2025 was $50.9 million, consisting of $12.1 million of cash and cash equivalents, $25.2 million of availability under the ABL Agreement, limited by the Term Loan financial covenant, and $13.6 million of available funding under the Receivables Purchase Agreement.

Previous wording

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period. The Company also expects inventory turnover to fluctuate from period to period based on product and customer mix. Certain product categories have lower inventory turnover rates as a result of minimum order quantities from the Company’s vendors or customer replenishment needs. Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands. For the three months ended June 30, 2025, inventory turnover was 1.5 times, or 241 days, as compared to 1.8 times, or 208 days, for the three months ended June 30, 2024. Inventory turns have slowed compared to the prior year due to lower sales and higher inventory levels because of higher inventory purchases in the first quarter of 2025 intended to mitigate the impact of the tariffs.

Current wording

Inventory, a large component of the Company’s working capital, is expected to fluctuate from period to period, with inventory levels higher primarily in the June through October time period. The Company also expects inventory turnover to fluctuate from period to period based on product and customer mix. Certain product categories have lower inventory turnover rates as a result of minimum order quantities from the Company’s vendors or customer replenishment needs. Certain other product categories experience higher inventory turns due to lower minimum order quantities or trending sale demands. For the three months ended September 30, 2025, inventory turnover was 2.0 times, or 181 days, as compared to 2.1 times, or 175 days, for the three months ended September 30, 2024. Inventory turns have remained relatively consistent.